Non-paying ADM’s water cut by 50%

THE Eastern Cape bulk water supplier, Amatola Water, is starting to restrict and even cut the supply of bulk water to two municipalities that owe the water utility R132-million in debt.

The debt, which is growing at a rate of between R4-million and R8-million a month, is badly affecting the water utility financially, AW acting CEO Asanda Gidana told the Dispatch yesterday.

The debtors are Amathole district municipality (ADM) and Makana local municipality. ADM owes R86.3-million, and Makana R46-million.

“The operations of AW have also been negatively affected by this financial situation, which has resulted in budget cuts and postponement of AW’s other operational activities,” Gidana said.

Yesterday the Dispatch reported that AW had restricted water distribution to a number of villages under ADM, cutting its water supply to ADM by 50%. The cuts began on January 1.

But areas like Peddie, Glenmore, Masincedane, Mnyameni, Binfield and Debe would hardly be affected by the restrictions, said Gidana.

In a letter Amatola sent to the ADM, seen by Dispatch, Gidana said they had no authority to set aside the debt and would continue “recognising the debt owed by ADM and to charge interest on all outstanding debt outside the payment terms”.

On average, AW sells about R9.6-million worth of bulk water to ADM per month. “However, ADM has indicated that it can only afford to pay for water services to the value of R5.8-million per month.

“This effectively results in AW suffering a loss of between R4.2-million and R8.2-million a month.

“This relates to the five-year right-of-use contract entered between the two parties from October 2013 to September 2018.

AW cancelled the Makana contract in August 2017 and has discontinued operations there due to non-payment of a R46-million debt.

ADM and Makana officials could not be reached yesterday and cooperative governance and traditional affairs MEC Fikile Xasa’s office did not respond to questions. —